Exit and Growth Strategies for Middle Market Businesses

The report below provides a good overview of the third Quarter M&A activity in the Metal Fabrication Industry Sector. M&A activity for North American based target companies in the Metal Fabrication sector for Q2 2018 included 52 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions was announced in June when Steel Dynamics, Inc. acquired Companhia Siderúrgica Nacional, LLC for US$400 million in cash. The transaction is expected to be accretive to near-term earnings and cash flow per share. In addition, the transaction is believed to expand Steel Dynamics’ annual flat roll steel shipping capacity to 8.4 million tons and total shipping capability to 12.4 million tons. Companhia Siderúrgica Nacional is located in Terre Haute, Indiana and manufactures coiled steel sheet products.

Tariffs on steel imposed by the Trump administration have had the sector in flux. The graph below illustrates how tariffs effect certain states.

Industry Indicators

US durable goods manufacturers’ shipments of fabricated metal products, an indicator of fabricated metal parts production, rose 10.7% year-to-date in May 2018 compared to the same period in 2017.

US steel mill product prices, an indicator of commodity steel costs for fabricated metal products manufacturers, rose 12.3% in June 2018 compared to the same month in 2017.

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